The Government is proposing to extend the unfair contract term (UCT) protections to insurance contracts, says Minister for Revenue and Financial Services, Kelly O’Dwyer.
In its Proposals Paper, the Government has set out a model for extending the UCT protections, which ensures that consumers and small businesses who purchase insurance are provided with the same protections available to other financial products and services.
Under the Australian Securities and Investments Act, a term is considered unfair if:
- It would cause significant imbalance in the parties’ rights and obligations; and
- Is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
- Would cause detriment to a party if it were to be applied or relied on.
The proposed model would amend section 15 of the Insurance Contracts Act to allow these UCT laws to apply to both general and life insurance contracts and would tailor the UCT laws to accommodate specific features of those contracts.